BSkyB faces competition probe

Competition watchdogs have escalated an inquiry into the UK satellite broadcaster BSkyB.

It is what we asked for

Mark Woods, ONdigital

The Office of Fair Trading, which has been lobbied by a rival broadcaster to probe "abuses" by BSkyB, is launching an inquiry into the firm under the Competition Act.

If found guilty of breaking the legislation, introduced in March to clampdown on unfair trade by cartels and firms with monopoly positions, BSkyB could face fines totalling 10% of UK turnover.

The firm's turnover for the year to the end of June was £1.85bn, including some foreign sales, notably in Eire.

BSkyB said it would "continue to co-operate" with the OFT, which opened a routine review into the broadcaster in January.

"We look forward to an early conclusion to this [Competition Act] inquiry," said BSkyB, which broadcasts the Sky TV channels.

The OFT said the investigation would last six months.

'Grounds for suspicion'

The watchdog has declined to reveal any specific area of concern in BSkyB's trading practices.

Former OFT chief John Bridgeman: "Competition must be healthy"

"We need to have reasonable grounds for suspicion to open this inquiry," an OFT spokeswoman told BBC News Online.

"That does not mean any infringement has happened."

The January inquiry was launched to see if BSkyB had kept to promises made in 1996 to open up the pay-television market to rival firms.

More than nine million people subscribe to Sky channels, either directly or through packages offered by cable companies or rival digital broadcasters such as ONdigital.

"We have to be sure that competition is healthy and responsive to developments," John Bridgeman, then director general of fair trading, said when launching the investigation in January.

'Unjustifiable' price rises

But ONdigital, which carries six Sky stations to its 1 million subscribers, has accused the BSkyB of overcharging so much for its premier channels that rivals cannot make profit from breoadcasting them.

It is pretty extraordinary that while it is still under investigation by the OFT, Sky should try to force through huge price rises

ONdigital

ONdigital last month demanded an OFT inquiry after BSkyB again increased charges.

"ONdigital believes the increases are unjustifiable, and are an abuse of Sky's dominant position in the provision of sports and movie channels," the firm said last month.

"It is pretty extraordinary that while it is still under investigation by the OFT, Sky should try to force through huge price rises of up to 40% on their, and our, customers."

BSkyB at the time said the price rises were necessary to recoup fees paid to win broadcast rights for events such as Premier League football matches.

Rival welcomes probe

ONdigital on Tuesday welcomed the OFT review.

"It is what we asked for," spokesman Mark Woods told BBC News Online.

Shares in BSkyB, which slid to 1011p immediately following the OFT's announcement, recovered to close up 22p at 1044p.